The import bill for dairy products hit a new record last year at just over £1.5bn, 7% up on 2004. Over the past three years the value of dairy imports has soared by 40%.

The UK dairy balance of payments deficit rose to a record £893m, up 20% on 2004.

There are three main reasons for this. Prices of imports have been rising, pushing up their overall value. But with UK milk production falling and consumption of cheese and butter rising, the UK has also been buying more volumes in from abroad.

Imports of cheese, valued last year at £850m, account for the biggest proportion of last year's figure. Mostly Cheddar and speciality products from EU sources, cheese imports rose 4% over the previous year. Meanwhile, imports of butter and dairy spreads cost the UK some £308m last year compared with £284m the year before. Apart from those from New Zealand, most of these butter and spread imports are from EU countries, with Denmark and Ireland the most important suppliers.

The import bill for fresh products is also high at £222m, up by 7% on 2004. Most of these imports are yoghurt and dessert products with France, Germany and Belgium accounting for 83% of the total.

Imports of powdered and condensed milks, liquid milk and cream and whey products rose last year to total £154m.

Although the UK is not a major exporter of milk and dairy products, earnings still amounted to £642m, down 7% on the previous year. Cheese made up a third, totalling £218m, up 12% in value on 2004.

The second-most important export in value terms was liquid milk. There are big shipments of milk for processing from Northern Ireland into the Republic. These, and other smaller exports, were equivalent to 3.5% of the total UK milk quota.